BSE to launch currency, interest rate derivatives

November 15, 2013 14:31 IST

The Bombay Stock Exchange (BSE) will launch currency and interest rate derivatives on its platform in the first week of December, its chief executive said on Thursday.

Speaking on the sidelines of the +91 Europe India Summit in London, Ashishkumar Chauhan told Reuters that BSE had received all the relevant regulatory approvals to launch the products, which will include rupee-dollar futures contracts.

BSE will become the fourth player in currency derivatives in India, after the National Stock Exchange, the MCX Stock Exchange and United Stock Exchange, in which BSE has a 15 percent stake.

But Chauhan believes there is still appetite for BSE's offering, as volatility in the rupee continues to make investing in alternative currencies attractive.

In contrast, India has struggled to develop liquidity in debt derivatives, depriving banks and other financial firms of a hedging opportunity.

Last month, the Reserve Bank of India (RBI) took action to reverse that, announcing it would introduce 10-year interest rate futures contracts by the end of the year.

Chauhan said those contracts would be included on BSE's platform.

The CEO declined to give any revenue targets for the products, saying BSE would first aim to grow market share and ensure the offering was sustainable. Revenue targets would likely be outlined six months after launch, he said.

BSE would keep transaction charges on the products at zero for those first six months, Chauhan added. Following that period, charges would rise to roughly 40 percent of what its competitors charge, reflecting the bourse's long-term strategy.

"We have always been the lowest cost, fastest, most high-tech liquidity platform in the country," Chauhan said.

The products will trade on technology BSE acquired from Germany's Deutsche Boerse, which will quicken trading speeds from 10 milliseconds to 200 microseconds.